Stocks Idle as Gauge of Manufacturing Skids

Stocks were flat Monday as investors digested a mixed bag of economic data and marched in place ahead of Tuesday's presidential election.

"Right now that money is sitting on the sidelines waiting to see what happens tomorrow," Jack Bouroudjian, a principal at Brewer Investment Group, said on CNBC.

A relief rally is expected on Wall Street for Tuesday, the day of the U.S. presidential election, as business leaders and analysts continue to debate which candidate will be better for the economy.

The morning's economic data were mixed.

U.S. business conditions took a sharp downturn in the third quarter and the near-term outlook is even more gloomy, according to a quarterly survey conducted by the National Association for Business Economics.

The Institute for Supply Management reported its gauge of manufacturing activity dropped to 38.9in October, its lowest level in 26 years. Economists had expected a more modest drop to 42.

"The PMI indicates a significantly faster rate of decline in manufacturing when comparing October to September," said Norbert J. Ore, chairman of the ISM survey committee. "It appears that manufacturing is experiencing significant demand destruction as a result of recent events, with members indicating challenges associated with the financial crisis, interruptions from the Gulf hurricane, and the lagging impact from higher oil prices," Ore said.

Meanwhile, construction spending fell 0.3 percent in September, better than the 0.7-percent drop expected, and August spending was revised upward to a 0.3-percent increase.

But there is little relief to come from interest rate cuts by the Federal Reserve, policy-maker Jeffrey Lacker said, insisting that the Fed must not forget about inflation as it battles recession, or leave interest rates too low for too long next year.

Some relief, however, looked set to come for homeowners, as JPMorgan Chase, the nation's largest bank and one of its biggest mortgage lenders, temporarily halted foreclosures Friday and offered to renegotiate a swathe of mortgages.

Oil drifted lower as leaders of the Organization of Petroleum Exporting Countries have declared their intentions to cut production to defend prices. Shares at energy leaders ExxonMobil and Chevron, both Dow components, edged lower premarket.

Another Dow component, , looked poised for an active day after the company agreed to a four-year contract with its 27,000-member assembly workers union over the weekend. Despite the agreement, Boeing shares slipped 1.2 percent premarket after gaining as much as 3.5 percent earlier.

Asian stocks closed higher as Seoul announced $11 billion in new spending and tax cuts and dismal Australian economic data cemented expectations that its central bank will slash rates again on Tuesday.

European markets were also mostly in the green as the Bank of England and the European Central Bank are expected to slash rates further when they meet on Thursday.